B-152586, DEC. 23, 1963

B-152586, DEC. 23, 1963

TO SAMUEL F. SCHWAG, ESQUIRE:

WE HAVE RECEIVED A REPORT DATED NOVEMBER 20, 1963, FROM THE GENERAL SERVICES ADMINISTRATION, SUBMITTED IN CONNECTION WITH YOUR PROTEST ON BEHALF OF THE HART INDUSTRIAL SUPPLY COMPANY AND ARE NOW IN A POSITION TO DEAL WITH THE MERITS OF THE MATTER. THE COMPANY'S BID ON SURPLUS SALES DISPOSAL INVITATION NO. 2 UPS-64-50, INVOLVING THE SALE OF OBSOLETE, SPECIAL PURPOSE AND INCOMPLETE MACHINE TOOLS THAT HAD BEEN THROUGH THE UTILIZATION, DONATION AND AID 607 PROGRAM CYCLES, WAS REJECTED AS NONRESPONSIVE FOR THE BIDDER'S FAILURE TO POST THE REQUIRED BID GUARANTY.

THE INVITATIONS, DATED AUGUST 29, 1963, RECITED ON PAGE 1: "BID DEPOSIT OF 20 PERCENT OF TOTAL AMOUNT OF BID IS REQUIRED.' THE INSTRUCTIONS TO BIDDERS IN THE "GENERAL SALE TERMS AND ONDITIONS" (STANDARD FORM 114-C), PAGE 18, STATED IN PERTINENT PART:

"1. BID DEPOSIT. WHERE A BID DEPOSIT IS REQUIRED BY THE INVITATION, SUCH DEPOSIT MUST ACCOMPANY THE BID AND BE FURNISHED IN CASH, OR BY POSTAL OR EXPRESS MONEY ORDER; CASHIER-S, CERTIFIED, OR TRAVELER'S CHECK; OR A COMBINATION THEREOF; MADE PAYABLE TO THE GOVERNMENT AGENCY CONDUCTING THE SALE UNLESS OTHERWISE DIRECTED IN THE INVITATION. AN IRREVOCABLE COMMERCIAL LETTER OF CREDIT MAY BE USED TO COVER THE BID DEPOSIT OR THE BALANCE OF THE PURCHASE PRICE SHOULD AN AWARD BE MADE UNLESS OTHERWISE DIRECTED IN THE INVITATION.'

THE "SPECIAL SALE TERMS AND CONDITIONS," UNDER "DEPOSIT AND PAYMENT," READ AS FOLLOWS:

"A 20 PERCENT BID DEPOSIT IS REQUIRED BY CASH, UNCERTIFIED PERSONAL AND/OR BUSINESS CHECK, BANK DRAFT, MONEY ORDER, CASHIER'S OR TRAVELER'S CHECKS, THIS SUPERSEDES INSTRUCTIONS CONTAINED ON SF 114C UNDER "INSTRUCTIONS TO BIDDERS. * * *.'

THE INVITATION PRESCRIBED NO PENALTY FOR A BIDDER'S FAILURE TO COMPLY WITH THE REQUIREMENT OF A BID GUARANTY.

THE OPENING, WHICH TOOK PLACE ON SEPTEMBER 25, 1963, DISCLOSED THAT THE HART INDUSTRIAL SUPPLY COMPANY HAD BID ON SOME 39 OUT OF 240 ITEMS OFFERED FOR SALE BY THE GOVERNMENT AND HAD BEEN HIGH BIDDER ON 28 ITEMS. THE COMPANY'S BID WAS NOT ACCOMPANIED BY ANY FORM OF BID DEPOSIT, HOWEVER, IT DID REFERENCE AN ANNUAL GOVERNMENT BID BOND BY RECITING "U.S. GOVERNMENT BID BOND NO. SF 151-64-S-266" ON THE SPACE CALLING FOR DISCLOSURE OF THE FORM OF THE GUARANTY.

YOU PROTEST THE REJECTION OF YOUR CLIENT'S BID ON THE GROUNDS THAT THE REFERENCE TO THE ANNUAL BID BOND IN THE BID WAS SUFFICIENT TO SATISFY ANY REQUIREMENT FOR BID SECURITY IN THE INVITATION; THAT EVEN IF IT WAS NOT, THE INVITATION MUST BE CONSTRUED AS ALLOWING BIDDERS TO POST THEIR BID GUARANTIES AT ANY TIME BEFORE AWARD (THE REQUIREMENT THAT A BID DEPOSIT ACCOMPANY THE BID BEING SUPERSEDED BY THE AFORE QUOTED STATEMENT IN THE SPECIAL TERMS AND CONDITIONS); AND FINALLY THAT, IF THE INVITATION DID REQUIRE THE DEPOSIT OF BID SECURITY BEFORE OPENING, ITS FAILURE TO PRESCRIBE THAT NONCOMPLIANCE WOULD RENDER A BID NONRESPONSIVE AND CAUSE IT TO BE REJECTED (A RECITATION ENJOINED, ACCORDING TO YOU, BY FEDERAL PROCUREMENT REGULATION 1-10.102.4 (A) (2) ( MUST BE VIEWED AS MAKING THE REQUIREMENT AN IMMATERIAL ONE WHICH THE CONTRACTING OFFICER HAD DISCRETION TO WAIVE BY ACCEPTING A VALID BID BOND FROM HART AFTER OPENING (THE CONTRACTING OFFICER ALLEGEDLY HAVING BEEN REMISS IN THE PERFORMANCE OF HIS DUTIES BY FAILING TO WAIVE THE REQUIREMENT SINCE HE THEREBY DEPRIVED THE GOVERNMENT OF $7,639.70 IN ADDITIONAL REVENUES FROM THE SALE).

STANDARD FORM 151, WE ARE GIVEN TO UNDERSTAND, IS AN ANNUAL BID BOND FORM APPROPRIATE FOR USE IN DISPOSALS (STANDARD FORM 150 IS USED ON A ONE-TIME BASIS), JUST AS STANDARD FORM 34 (ANOTHER ANNUAL BID BOND FORM) HAS BEEN PRESCRIBED FOR USE IN PROCUREMENTS OF SUPPLIES OR SERVICES, WHEN APPLICABLE REGULATIONS PERMIT ITS TENDER IN SATISFACTION OF A BID DEPOSIT OBLIGATION. AGENCIES FOLLOWING THE PRACTICE OF ACCEPTING ANNUAL BID BONDS EACH MAINTAIN A CENTRAL REGISTRY OF ALL SUCH BONDS TO WHICH PROCUREMENT OFFICIALS MAY RESORT FOR INFORMATION WHEN, IN THE CONDUCT OF A GOVERNMENT TRANSACTION, THEY ENCOUNTER THIS FORM OF TENDER OF BID SECURITY. THE SYSTEM IS USED TO SUIT THE CONVENIENCE OF BOTH REPETITIVE BIDDERS AND THE GOVERNMENT. THE GENERAL SERVICES ADMINISTRATION DOES NOT MAINTAIN A CENTRAL REGISTRY AT THE PRESENT TIME IN EITHER THE DISPOSAL OR THE CONSTRUCTION AREAS OF ITS FUNCTIONS. CONSEQUENTLY, THE AGENCY DOES NOT NOW ACCEPT THIS TYPE OF BOND AS A FORM OF BID DEPOSIT AND WE ARE AWARE OF NO STATUTORY OR REGULATORY INJUNCTION UPON IT TO DO OTHERWISE. THE ANNUAL BID BOND WAS NOT ONE OF THE FORMS OF BID GUARANTY ENUMERATED AS ACCEPTABLE IN THE INVITATION AND HENCE WE MUST CONCLUDE THAT THE REFERENCE IN THE HART BID TO THE ANNUAL BID BOND DID NOT SATISFY THE REQUIREMENT OF THE INVITATION FOR THE POSTING OF A BID DEPOSIT.

IF THE INVITATION IN THIS CASE CALLED FOR THE POSTING OF A BID DEPOSIT WITH THE BID, IT IS BY NOW WELL SETTLED THAT THAT REQUIREMENT MUST BE CONSIDERED A MATERIAL PART OF THE INVITATION WHICH THE CONTRACTING OFFICER WAS WITHOUT AUTHORITY TO WAIVE AND FOR NONCOMPLIANCE WITH WHICH A BID WOULD HAVE TO BE DECLARED NONRESPONSIVE AND REJECTED. 38 COMP. GEN. 532. THIS RESULT WOULD OBTAIN EVEN WHEN THE INVITATION EXPRESSLY STATES THAT A BIDDER'S FAILURE TO SUBMIT A BID BOND OR OTHER BID SECURITY WITH HIS BID "MAY" BE CAUSE FOR ITS REJECTION. 39 COMP. GEN. 827. THE FACT THAT WE ARE HERE DEALING WITH A DISPOSAL AND NOT A PROCUREMENT DOES NOT PRECLUDE THE APPLICATION OF THIS RULE. B-141226, DATED DECEMBER 31, 1959.

IT IS CLEAR FROM READING THE SPECIAL CONDITION IN THE INVITATION ENTITLED "DEPOSIT AND PAYMENT" THAT IT WAS INTENDED BY THE GOVERNMENT TO RELAX THE REQUIREMENT FOR THE POSTING OF A BID DEPOSIT BY MAKING LESS NEGOTIABLE FORMS OF SECURITY ACCEPTABLE IN FULFILLMENT OF THE CONDITION. IT IS EQUALLY CLEAR THAT THE GOVERNMENT DID NOT INTEND BY THE LANGUAGE TO ABROGATE THE REQUIREMENT. THE QUESTION BECOMES WHETHER THE LANGUAGE MAY REASONABLY BE READ TO MEAN THE BID SECURITY NEED NO LONGER BE SUBMITTED WITH THE BID OR BEFORE THE TIME SET FOR OPENING. THAT THE PHRASEOLOGY EMPLOYED COULD HAVE BEEN CLEARER CANNOT BE DENIED. NONETHELESS WE FEEL THAT A REASONABLE BIDDER, HAVING PERUSED THE INVITATION, WOULD HAVE REACHED THE CONCLUSION THAT THE RELAXATION OF THE FORM OF BID SECURITY WAS THE ONLY OBJECTIVE OF THE SUPERSEDING LANGUAGE. THE FACT THAT ALL OF THE 82 OTHER BIDDERS AT THE SALE SUBMITTED THE REQUISITE BID DEPOSITS BEFORE OPENING IS CONVINCING EVIDENCE OF THE VALIDITY OF THIS CONCLUSION. HENCE, WE CANNOT AGREE THAT THE INVITATION NO LONGER DIRECTED THE SUBMISSION OF BID DEPOSITS WITH THE BIDS.

ALTHOUGH THE EFFECTIVENESS OF THE INVITATION WOULD HAVE BEEN IMPROVED BY A RECITATION THAT A BIDDER'S FAILURE TO HAVE HIS BID ACCOMPANIED BY HIS BID SECURITY WOULD RESULT IN THE REJECTION OF HIS BID, WE DO NOT AGREE THAT SUCH A STATEMENT WAS REQUIRED TO BE INCLUDED BY FEDERAL PROCUREMENT REGULATION 1-10.102.4 (A) (2). THE FEDERAL PROCUREMENT REGULATIONS, BY THEIR EXPRESS TERMS (SEE F.P.R. 1-1002) ARE FOR APPLICATION ONLY TO PROCUREMENTS AND NOT TO DISPOSALS EXCEPT INSOFAR AS A PARTICULAR SECTION OR SECTIONS MAY HAVE BEEN MADE APPLICABLE TO DISPOSALS BY REFERENCE IN PERTINENT DISPOSAL REGULATIONS (WHICH IS NOT THE CASE HERE).

THE USE OF A BID BOND REQUIREMENT IN MOST CASES IS SOLELY A MATTER OF ADMINISTRATIVE JUDGMENT. UNDOUBTEDLY, HAD HE BELIEVED THE GOVERNMENT'S BEST INTERESTS PERMITTED IT, THE CONTRACTING OFFICER COULD HAVE OMITTED THE REQUIREMENT FOR BID SECURITY FROM THIS DISPOSAL AT THE TIME THE INVITATION WAS DRAFTED. BUT HAVING ISSUED THE INVITATION SETTING FORTH THE REQUIREMENT, WE THINK THAT THE RIGHTS OF OTHER BIDDERS WHO SUBMITTED THEIR BIDS IN CONFORMITY THEREWITH WOULD HAVE BEEN PREJUDICED IF THE CONTRACTING OFFICER HAD THEREAFTER WAIVED A MATERIAL TERM OF THAT REQUIREMENT BY ALLOWING THE PROFFERMENT OF BID SECURITY AFTER THE TIME SET FOR OPENING OF BIDS. WE ARE INFORMED THAT THE DIFFERENCE BETWEEN YOUR CLIENT'S BIDS AND THE NEXT HIGHEST BIDS WAS ACTUALLY $6,663.70, BUT REGARDLESS OF THE AMOUNT INVOLVED, THE GOVERNING PRINCIPLE IS THE SAME WHICH IS ESSENTIALLY THAT THE INTEGRITY OF THE COMPETITIVE BIDDING PROCESS REQUIRES THE MAINTENANCE OF BIDDERS ON A PARITY. COMPARE B-150206, DATED DECEMBER 12, 1962.